IECD.No. 13 /08.12.01/2001-02

November 22, 2001

The Chairmen/Chief Executives of
All commercial banks

Dear Sirs,

Financial assistance to wood and panel based
Industry in the North Eastern Region

It has come to our notice that owing to certain extraneous circumstances, the operations of the wood and panel based industry in the North Eastern Region have been adversely affected, resulting in closure of a number of units during the last four years. Considering the importance of this industry in the North Eastern Region and with a view to enabling the industry to regain its financial health, it has been decided that banks may extend financial assistance, by way of a rehabilitation package as indicated below, to such of the manufacturing units in the industry as are considered potentially viable by the banks.

(i) Funded Interest Term Loan (FITL)

The unrealised portion of interest in the existing borrowal accounts may be funded and treated as FITL. The FITL will have a repayment period of 7 years inclusive of a moratorium period of 2 years.

(ii) Working Capital Term Loan (WCTL)

Irregular portion of cash credit i.e. core irregularity other than unrealised interest (on both cash credit and institutional loans) may be converted into WCTL. As in the case of FITL, the WCTL will have a repayment period of 7 years inclusive of a moratorium period of 2 years.

(iii) Interest on FITL and WCTL

The rate of interest on FITL and WCTL may be the same as applicable to normal term loans.

(iv) Working Capital

Banks may assess and provide, as per their lending norms, fresh need-based working capital assistance to the manufacturing units in the industry.

Banks may please note that the above package would be applicable only to units considered as potentially viable by them and should have the approval of term lending institutions.

Yours faithfully,
(R.Sebastian)
General Manager